Founded by Len Tweten and run by the Tweten family until 2000, Magnolia entered the world of cameras before getting into high-end audio/video products during the 1970s and 1980s. Four years ago, Tweten and Best Buy CEO Brad Anderson had the idea of bringing Magnolia stores inside Best Buy. The first in California shared square footage with a Best Buy but not a common entrance. Since then, Best Buy has opened 365 Magnolia Home Theatre locations in stores nationwide.
“The idea was to bring higher-level products and services in to Best Buy,” said COO Steve Delp. “Prior to that, no high-end vendors wanted to engage Best Buy in a business relationship for fear of commoditization and dilution of these exclusive brands and products.”
Feeling right at home
While a consumer could go to Magnolia just to buy a TV, that isn’t really what the Magnolia experience is about. Magnolia not only has the best audio and video products, it has a stated goal of 100% satisfaction, meaning customers will deal only with knowledgeable sales reps well-versed in the latest technologies. With the rise of home automation including everything from an advanced remote control for home theatres to touch panels that can completely control anything electronic inside residential and commercial spaces, Magnolia’s goal is to make sure how products perform in experiential retail locations is exactly how they perform after purchase in the customer’s home.
With over 1,000 Best Buy US stores, guaranteeing 100% customer satisfaction is a near impossibility. Therefore, bringing that mentality into its stores can help the parent company learn from Magnolia. The original purchase of Magnolia came about because leadership of both companies had a shared outlook on the direction consumer electronics were taking. Because Magnolia was also a premium business with premium customers and a low employee retention-loss rate, Best Buy saw an opportunity in Magnolia’s expertise and used it to train and deliver a more knowledgeable sales associate to customers.
“From a sales and installation standpoint we have some of the finest people in the industry,” Delp said. “It starts by having the right person up front with the right knowledge who can help customers through everything from a simple transaction to what might be a year-long home build.”
This makes Magnolia’s variable training program critically important. The company has internal service, sales, and technical training programs in addition to long-term vendor relationships with companies like McIntosh and MartinLogan, providing Magnolia with access to the finest vendor reps for additional staff training. By investing in creating and retaining employees with a thorough knowledge base, over time employees can become the connection the customer needs throughout the sales and installation process. Reps can also articulate what the customer wants to Magnolia’s engineering staff.
With Best Buy opening an average of 100 stores annually in recent years, the idea has never been to put a Magnolia Home Theatre into every Best Buy. Instead, the companies expect to launch 10 to 20 per year based on area demographics and the local Best Buy field team recommendations. The store-within-a-store is designed to represent the high-end look and feel of a Magnolia stand-alone.
Over the last few years, the stand-alone locations have been remodeled to create a home-like environment. Replicated living rooms, kitchen areas, outdoor living spaces, theaters, and conference rooms allow the company to paint a picture for consumers that mirrors what they will see and hear when they bring products home.
“That way we can demonstrate how a system could actually work in your home and show technological features available to ensure an integrated home entertainment experience. It also allows us to demonstrate home automation technology that can lead to home expense reductions, which many customers don’t even know about,” Delp said.
Two key investments the company made to support growth were in a new Web site and a customer relationship management (CRM) tool for associates. Magnolia’s old Web site simply listed products and sent you to the store. The new site is experiential and meant to inspire consumers to think about what they can and want to accomplish by buying a new home theater or installing home automation and integrating security, lighting, and environmental controls. It showcases some brands and products Magnolia carries, but is primarily intended to help customers understand how technology can make their lives easier.
The new CRM tool enables Magnolia to better serve and support customers and allows sales associates to better communicate with customers in a portfolio they create over time. CRM helps Magnolia understand customers’ purchase history and permits the company to better serve specific needs of individual customers through product recommendations and upgrades as well as understanding when existing purchases will have compatibility issues with proposed purchases, providing better purchase guidance for the customer.
With the population’s desire for new technology, Delp said more people are becoming concerned about energy efficiency. Computer monitors and plasma TVs are energy black holes, so Magnolia intends to be on the cutting edge of using green controls to stop energy bleeding. It is now possible for people to manage and schedule the energy intake of their homes using control systems, so Delp sees mainstreaming this knowledge as a long-term responsibility and as important as the next evolution in THX surround sound.
While commoditization of high-end electronic products is a challenge because of the Walmart’s and Costco’s of the world looking for product volume, the knowledgeable staff and value-added incentives in delivery, installation, and after-sales service should keep Magnolia competitive inside and outside Best Buy as long as it sticks to its 100% satisfaction goal.
“Making everything work correctly and integrating it into the home easily for the consumer can be a challenge because technology moves so fast,” Delp said. “We have to stay nimble and stock products we know work together so customers see the expected results.”